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Cost Management with AWS Budget

Overview

In this lab, you will learn more about the AWS Budget service to help you manage costs on your AWS account. Cost management is a top priority when operating your systems on the Cloud.

AWS Budget

AWS Budget is a service that provides the ability to set up budgets to send alerts when costs exceed the budget allowance (or are forecasted to exceed the budget).

AWS Budget includes 4 types of budgets:

  • Cost Budget
  • Usage Budget
  • RI Budget
  • Savings Plans Budget

Cost Budget

Cost Budget allows you to send alerts when total costs exceed the cost threshold in the budget.

Usage Budget

Usage Budget allows you to send alerts when total usage by service you select exceeds the usage threshold in the budget.

ℹ️ Information: For example: Usage by running hours of EC2 service.

Reservation Instance (RI) Budget

RI Budget allows you to send alerts based on the usage of your prepaid services (reserved instances).

ℹ️ Information: Reserved instance is a method to reduce instance usage costs by allowing you to pay upfront or commit to instance usage for a term of 1 - 3 years.

Savings Plans Budget

Savings Plans Budget allows you to send alerts based on the usage of services specified in savings plans.

ℹ️ Information: Savings plans is also a method to reduce instance usage costs by allowing you to pay upfront or commit long-term (from 1 to 3 years) to instance usage. Savings plans is a newer and more flexible model than Reserved Instances with equivalent discounts. For EC2 Instances, you are encouraged to use Savings plans.

💡 Pro Tip: Using Savings Plans instead of Reserved Instances for EC2 will provide greater flexibility with the same discount level.

Benefits of Using AWS Budget

Using AWS Budget brings many benefits to businesses:

  1. Cost Control: Helps you proactively monitor and control AWS costs.
  2. Timely Alerts: Receive notifications immediately when costs exceed set thresholds.
  3. Financial Planning: Supports financial planning and future cost forecasting.
  4. Resource Optimization: Identify high-cost services to optimize usage.
  5. Cost Allocation: Easily allocate costs to different projects, departments, or customers.

Steps to Set Up AWS Budget Effectively

  1. Define Budget Goals: Clearly understand your needs and spending limits.
  2. Analyze Current Costs: Review current costs to set reasonable budgets.
  3. Set Alert Thresholds: Set alert thresholds at appropriate levels (typically 80% and 100% of budget).
  4. Configure Notifications: Ensure notifications are sent to the right authorized personnel.
  5. Monitor and Adjust: Regularly review and adjust budgets when necessary.